Bill Ackman Just Finished 'The Most Important Presentation' Of His Career And The Market Is Laughing At Him (HLF)

Ackman, who runs Pershing Square Capital, gave what he called "the most important presentation" of his career.

In shorting Herbalife to zero, he's gone as far as comparing the company to the Nazis.

But today the market laughed at him: The stock surged 15% as he spoke.

There were hundreds of folks gathered at the AXA Equitable Building in Midtown Manhattan. Even Ackman's father was in attendance. Thousands of people tuned in via a webcast.

For more than a year, Ackman has been loudly short Herbalife — a maker of nutrition shakes. He believes the company is a "pyramid scheme." His presentation today focused on the company's so-called nutrition clubs.

Earlier this morning, Herbalife 's CFO, John DeSimone, told CNBC that Ackman's "bark is worse than his bite."

If the stock surge means anything, perhaps DeSimone was correct.

There wasn't a major bombshell in Ackman's presentation. The 250-plus slide deck was very detailed. The biggest thing was that Ackman believes the company is skirting labor laws with its nutrition clubs.

In sum, though, Ackman alleged that Herbalife had "fictitious customers" and a "fictitious business opportunity." He called Herbalife "a fraud perpetrated by Herbalife's senior management and members of its Founder's Circles, Chairman's Club and President's Team conceived, designed and executed to exploit the poor."

Ackman began the presentation by going over the backstory about Herbalife's founding. He then moved to his Herbalife "pyramid scheme" thesis.

Ackman claimed Herbalife "targets the poorest of the poor." He then shared some slides based on a document he obtained from a whistleblower.

Ackman claimed that Herbalife "seeks to exploit the extremely poor in new and existing markets."

He said that Herbalife denies it targets ethnic groups.

Ackman claims one way they do this is through the nutrition clubs.

According to Ackman, Herbalife's nutrition clubs are critical to the company's growth.

Ackman said that Pershing Square spent $50 million on investigating:

"I'm not proud of that number."

He said they investigated over 240 nutrition clubs:

"We had investigators go in and become part of that program."

First, he went over the rules of the nutrition clubs. For example, the clubs aren't allowed to attract customers – no advertisements or promotions allowed. They also can't have signage or an open-closed sign.

Ackman said that his team went over the economics of 10 nutrition clubs in Queens, New York. He concluded that they're a money-losing business. On average, he said, these clubs lose $12,000 a year before paying the owner.

"This doesn't seem to be a particularly good business model," he said.

Ackman said the real purpose of the nutrition club was to recruit members.

He said these clubs "grow like a virus" through duplication. He showed a slide comparing the number McDonald's and Herbalife nutrition clubs in Queens. He pointed out that while the McDonald's are spread out, the nutrition clubs are on top of each other.

Ackman then invited Christine Richard, a former Bloomberg News reporter turned researcher who gave him the Herbalife idea, on stage. His firm's lawyer, David Klafter, also joined him on stage.

They started going over how you get certified to run a nutrition club.

In short, Ackman believes the nutrition clubs are a big fraud.

"If you look at the greatest frauds," Ackman said using Enron's phantom trading floor as an example, "what Herbalife has is they have phantom or fictitious customers."

He said the people running the clubs aren't bad people.

"It's a tragedy because they don't know they're being defrauded."

Ackman also alleged that the clubs are violating labor laws.

"Everyone's working without being paid, which is a violation of the labor laws."

It got emotional at the end when Ackman talked about the "American dream" his father and grandfather were fortunate to obtain when they came to the U.S.

"I'm a huge beneficiary of this country. Michael Johnson is a predator ... It's criminal. It's time to shut [Herbalife] down," Ackman said choking up.

"The American dream has been tarnished in a lot of different ways...but when you have a New York Stock Exchange company specifically targeting people and using the American Dream principles ... they sell the American dream. It's criminal. Unfortunately, it's taking the regulators too long."

The Ackman-Herbalife saga has been ongoing for more than a year and a half.

In late December 2012, Ackman publicly declared via a 342-slide presentation that he was short Herbalife – a multilevel marketing company that sells nutritional supplements and weight loss shakes.

Ackman believes the company operates as a "pyramid scheme" that targets lower income individuals. It's Ackman's contention that regulators, specifically the Federal Trade Commission, will be persuaded to shut the company down.

Shortly after, a number of fund managers, most notably Carl Icahn, piled on by going long the stock shortly after Ackman revealed his short bet.

Icahn, who seems to have made up with Ackman more than a year after a nasty televised brawl, said last week at a conference that he hasn't sold a single share of Herbalife.

Back in March, the FTC opened an investigation into the company.

So far, Ackman has racked up millions in paper losses on his bet. He has yet to break even on his short. He's said that he will take this short to "the end of the earth."

One person in the crowd asked if Ackman was trying to goad the company into suing him, given his inflammatory language.

Ackman responded: "Bring it on."

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